Wednesday, December 2, 2009

Simpson's Paradox

How can be possible that unemployment rate become higher now than in 1980’s but if we broke down population by education grade each component’s unemployment rate have surged.

Currently unemployment rate is 10.8 per cent in US and in 1980’s arrived to 10.3. However, by population education’s unemployment rates were and are the following:
(Invented data)



The solution to this apparently paradox is weights. Today there are more graduates than in 1980’s so 7% weights more than the 5% did for their respective Total rates.

You can know more at WSJ > The Numbers Guy

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